Correlation Between Whiting Petroleum and Bristol Myers

Can any of the company-specific risk be diversified away by investing in both Whiting Petroleum and Bristol Myers at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Whiting Petroleum and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Whiting Petroleum and Bristol Myers Squibb, you can compare the effects of market volatilities on Whiting Petroleum and Bristol Myers and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Whiting Petroleum with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whiting Petroleum and Bristol Myers.

Diversification Opportunities for Whiting Petroleum and Bristol Myers

0.53

Correlation Coefficient

Whiting Petroleum  Bristol Myers

Very weak diversification

The 3 months correlation between Whiting and Bristol is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Whiting Petroleum and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Whiting Petroleum is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Whiting Petroleum are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Whiting Petroleum i.e., Whiting Petroleum and Bristol Myers go up and down completely randomly.

Pair Corralation between Whiting Petroleum and Bristol Myers

Considering the 90-day investment horizon Whiting Petroleum is expected to under-perform the Bristol Myers. In addition to that, Whiting Petroleum is 2.64 times more volatile than Bristol Myers Squibb. It trades about -0.03 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.07 per unit of volatility. If you would invest  7,093  in Bristol Myers Squibb on January 27, 2024 and sell it today you would lose (2,623) from holding Bristol Myers Squibb or give up 36.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	11.13%
Values	Daily Returns

Whiting Petroleum  vs.  Bristol Myers Squibb

Whiting Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whiting Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Whiting Petroleum is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Bristol Myers Squibb

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Whiting Petroleum and Bristol Myers

The main advantage of trading using opposite Whiting Petroleum and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whiting Petroleum position performs unexpectedly, Bristol Myers can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bristol Myers will offset losses from the drop in Bristol Myers' long position.

The idea behind Whiting Petroleum and Bristol Myers Squibb pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.